Category: Gold & Silver 2019

Friday, May 24, 2019

Technical analyst Clive Maund charts gold and explains why he believes gold will turn higher later in the summer. Gold and silver dropping back again late last week had investors in the precious metals sector feeling despondent, especially as their fears were magnified by at least one analyst calling for gold to drop to the low $900s or even lower, which is normal when prices sink, but our charts are instead suggesting that gold and silver are close to completing giant bottoming patterns that started to form (in the case of gold) as far back as 2013.

We can best see gold's potential giant base pattern on a 10-year chart. It can be described as a complex Head-and-Shoulders bottom or as a Saucer, and is best considered to be both, or perhaps as a hybrid having the characteristics of both patterns. In any event, as we can see on this chart, it appears to be drawing close to breaking out of it, which will be a very big deal if it happens, because a base pattern of this magnitude can support a massive bull market. As for timing it could take several months and it is most likely to happen during gold's seasonally strong period from July through September. To maintain the bullish case it must stay above the Saucer boundary.

Silver looks considerably weaker than gold, although that is normal at this stage in the cycle. It is still considered likely that it is forming a Double Bottom with its lows of late 2015, and if so then the support at those lows should hold.

Thursday, May 23, 2019

In May, the WGC published a new edition of its quarterly report on gold demand. It features interesting data about the changes in gold demand and supply. What does the Gold Demand Trends Q1 2019 say about the gold market in the first quarter of the year? How will its conclusions be reflected going forward in the gold price?

WGC Publishes Report on Gold in Q1 2019

According to the newest WGC data, the supply of gold was virtually unchanged (modest growth in mine production and recycling were offset by a decline in hedging), while the gold demand rose 7 percent year-over year to 1,053.3 tons in the first quarter of 2019.

Tuesday, May 21, 2019

The last few trading days in gold were quite interesting, but overall gold has been a quite boring market in the last couple of months. Gold’s volatility index dropped to new lows as the current back and forth movement is just a small part of the same kind of movement on a broader scale. It’s more of the same. And when gold’s volatility gets very low, interesting things tend to happen next over 80% of the time. In other words, the situation in gold is now so boring that it’s a signal on its own. In today’s analysis, we’ll dig into details.

Monday, May 20, 2019

“Modern Monetary Theory (MMT) is a heterodox macroeconomic framework that says monetarily sovereign countries like the U.S., U.K., Japan and Canada are not operationally constrained by revenues when it comes to federal government spending. In other words, such governments do not need taxes or borrowing for spending since they can print as much as they need and are the monopoly issuers of the currency.” Investopedia

Of course governments are not ‘constrained’ by revenues. They have always been able to “print as much as they need”.

Modern Monetary Theory is not ‘modern’. Far from it.

In the late eighteenth century, France was deeply in debt. A general lack of capital and confidence had taken its toll and the economy was lacking in signs of activity. Growth was stagnant.

The conditions were such that it would be reasonable to expect a return to better times without interference by government. Unfortunately, that would require patience and restraint by the politicians. Most politicians cannot resist the cries of “do something”. Even if the cries are non-existent, the government will hear them.

Saturday, May 18, 2019

The Fed promised that the quantitative easing would be only temporary and that it would reduce its ballooned balance sheet to the pre-crisis level. Now, as the Fed adopted an interest targeting with ample-reserves, we know that this is not going to happen. We invite you to read our today’s article about the new Fed’s regime and find out how it works and what it implies for the US monetary policy and the precious metals.

The discussion about the US monetary policy concentrates on the changes in the interest rates and Fed’s balance sheet. But what is also very important is how the US central bank implements its monetary policy, especially that in recent years the Fed has started operating in a new monetary policy implementation regime. Let’s analyze that change and its implications for the economy and the gold market.

Before the bankruptcy of the Lehman Brothers, life was simple. And the economic textbooks adequately described how the US central bank conducted the monetary policy. In short, the FOMC set a target for the federal funds rate and reached that target through small purchases and sales of securities in the open market. The commercial banks had to hold some reserve balances to meet the reserve requirements. Banks who lacked these reserves, borrowed them in the federal funds market from banks who had excess liquidity. As the reserves were scarce, the Fed could affect the level of the federal funds rate and move it to the target level through changes in the supply of reserves, known as open market operations. For example, when the Fed observed that the market rate is above the target, it purchased the government bonds adding reserve balances to the banking system and creating downward pressure on the market rate.

Friday, May 17, 2019

On Monday, the price of gold has briefly jumped above $1,300. For the next two days, the yellow metal has been holding near that important psychological level, although it failed to rally subsequently. Let’s take a look at the trigger(s) of the upward move. The reaction of the gold market over the following days is pretty telling...

China Strikes Back

It has been a hot week! Indeed, just look at the chart below. As you can see, the price of the yellow metal leaped to $1,300 on Monday, even surpassing briefly that key level. What happened exactly?

Friday, May 17, 2019

Although most of the precious metals sector has trended lower in recent months, Gold has held up well. It and the other, weaker components of precious metals got a boost on Monday when China retaliated with tariffs of its own.

There has been little follow through since.

This begs the question, will a trade war lead to a new bull market in precious metals?

The short answer is yes if it leads to a downturn and Fed rate cuts.

Rate cuts coupled with higher inflation due to the tariffs is a very bullish combination for precious metals.

Thursday, May 16, 2019

Today I would like to update some ratio combo charts which may give us a sense of the bigger picture. Its like putting the pieces of a puzzle together where the small pieces don’t look like much by themselves but when they’re all added together it paints a clear picture. These ratio combo charts are just a piece of the puzzle that may add some clarity to some of the individual sectors.

Lets start with the TIP:TLT ratio chart in black with the TLT in red, which I use for the inflation/deflation debate. Most investors have their own individual stocks they like to look at in trying to answer the age old question, are we in an inflationary or deflationary cycle? When the ratio in black is rising it shows signs of inflation and when it’s falling deflation becomes possible.

On the left hand side of the chart you can see how the ratio in black topped out while the TLT was bottoming in 2011. Also at the bottom of the chart I have added the GDX and the CRB index with the 30 week ema which also topped out in 2011. Since the 2011 high the main trend has been down for the ratio chart in black which shows deflation. In July of 2016 both the ratio and the TLT topped out beginning a consolidation phase that would last for about 2 1/2 years with each forming a triangle consolidation pattern. In November of 2018 both broke out of their respective triangles signaling that we may see some deflation in our future. Again, at the bottom of the chart you can see the CRB index along with the GDX are currently trading below their 30 week ema which is not the end of the world but short term negative. The bottom line is that as long as the ratio in black keeps falling the odds favor a possible deflationary event maybe in the cards in the future.

Wednesday, May 15, 2019

Sector expert Michael Ballanger muses on the effects of Twitter and political maneuvers on the markets, and specifically on a favorite gold explorer.

I have a confession to make: There are no free markets anymore; there are only interventions. Of course, I bow to Gold Anti-Trust Action Committee (GATA) cofounder Chris Powell, who coined that brilliant phrase a few years ago, because it was certainly my exposure to GATA in 2005 that changed my perception of the insidious role of the bullion banks in controlling price and sentiment.

That, in fact, has since been expanded to include not just gold and silver but LIBOR, Fed funds, corporate bonds and, finally, stocks. The delivery method used to be one of the hired mouthpieces on CNBC, like former reporters Charlie Gasparino or Maria Bartiromo, but both have moved on and were replaced not by reporters with a "scoop," but rather central bank governors themselves. This has been the case for most of the pre- and post-global financial crisis period—up until the election of the current president, who has, along with several cabinet members such as Larry Kudlow and Smilin' Stevie Mnuchin, discovered that sending out messages to either roil or calm markets is best carried out via Twitter.

Wednesday, May 15, 2019

Over the past 6+ months, we’ve been covering the price rotations in precious metals very closely. We’ve issued a number of amazing calls regarding Gold and Silver over the past few months. Two of the biggest calls we’ve made were the late 2018 research post that suggested Gold would rally to above $1300, then stall. The other amazing call was our research team’s suggestion that April 21~24 would see Gold setup an Ultimate Base, or what we were calling a “Momentum Base”, near $1250 to $1275.

We issued both of these markets calls many months in advance of these dates/price levels targeting these moves. In both cases, we issued these market calls well over 60 days prior to the move actually taking place. The accuracy of these calls can be attributed to our proprietary price modeling solutions as well as the skill and techniques of our research team. Don’t mind us while we take a few seconds to take credit for some truly amazing precious metals calls over the past 6+ months.

Tuesday, May 14, 2019

Chair Powell claims that subdued inflation is caused by transitory factors. Does the recent data confirms his views? And just how transitory is the new tariff rate on $200bn Chinese imports? Will we see a creep higher in inflation about to lift the gold prices?

CPI Edges Up

At the post-FOMC press conference in May, Jerome Powell said that some transitory factors could be responsible for muted inflationary pressure. The latest data seems to support his view that the recent slowdown in inflation was temporary.

Tuesday, May 14, 2019

In a recent edition of Credit Bubble Bulletin, Doug Noland, the long-time critic of contemporary monetary policy, writes about the odd times in which we live from a financial perspective. “Such a precarious time in history,” he laments. “So much crazy talk has drowned out the reasonable. Deficits don’t matter, so why not a trillion or two for infrastructure? Our federal government posted a $691 billion deficit through the first six months of the fiscal year – running 15% above the year-ago level. Yet no amount of supply will ever impact Treasury prices – period. A Federal Reserve governor nominee taking a shot at ‘growth phobiacs’ within the Fed’s ‘temple of secrecy’, while saying growth can easily reach 3 to 4% (5% might be a ‘stretch’). Larry Kudlow saying the Fed might not raise rates again during his lifetime. Little wonder highly speculative global markets have become obsessed with the plausible.”

Tuesday, May 14, 2019

We had warned you about the miners’ bluff and we hope that you heeded it. Gold is still testing the neck level of the head-and-shoulders pattern, but silver is already back at its 2019 lows, while miners broke decisively below them. It may seem that the miners have declined enough and that a rebound is imminent from these levels. Should you hold your breath? Are we on a doorstep of a tradable rebound, or it ain’t here just yet?

To answer that, let’s turn to two analytical gems that have served us so well in the past. Not once, but many times.

We would like to point your attention to two factors that confirm that the next move lower is going to be significant. Yes, we know that you already know that as we provided myriads of details beforehand, but looking at the situation from a fresh perspective and seeing new signals makes it easier to be patient before the move gathers real momentum.

The first of them is the analysis of the silver stocks, and the second is the analysis of the popularity of 2 key search phrases for the gold market. Let’s start with the former.

Sunday, May 12, 2019

Into the Feb 2019 highs, traders had turned very bullish on the metals, understandably so, as the metals had been rallying for a number of months from their respective 2018 lows. Upside targets were being increased from the precious metals Gurus, and traders/investors were buying the short term bullish hype. Read full article... Read full article...

Saturday, May 11, 2019

Coming up Greg Weldon of Weldon Financial joins me for a sensational interview on how he views the precious metals now and which one he favors over the others. Plus, Greg has some warnings about why a failure to finalize a trade deal with China very soon could be very problematic for the U.S. stock market. So, be sure to stick around for one of our very favorite guests, Greg Weldon, coming up after this week’s market update.

As volatility unnerved stock market investors this week, gold proved to be a good safe haven. The yellow metal didn’t move all that much, but it did provide some measure of stability. For the week, gold prices are up 0.5% to trade at $1,287 per ounce.

Turning to the white metals, they are succumbing to wider selling pressure in economically sensitive assets. Silver shows a weekly loss of 1.4% to bring spot prices to $14.80 an ounce. Platinum is off 1.0% since last Friday to come in at $866. And finally, palladium is rallying strongly today and is now showing only a 0.6% decline on the week to trade at $1,355 per ounce as of this Friday morning recording.

Friday, May 10, 2019

Traditional alchemist always desired to turn lead into gold. The modern ones want to increase government spending without any limits. We invite you to read our today’s article about the Modern Monetary Theory and find out what is it and what would mean for the gold market, if implemented.

Great news for all who oppose the House of Lannister’s rule in King’s Landing – the final season of the Game of Thrones has eventually began, so the status quo in Westeros will be certainly challenged. Similarly, we have joyous news for all who dislike the mainstream economics – the new theory has recently joined the game of thrones among the economic theories after the Great Recession. The fresh alternative which is quickly gaining popularity is the Modern Monetary Theory (MMT). What is it and what would it bring for the economy and the gold market, if implemented?

Friday, May 10, 2019

The Fed has just published the newest edition of its Financial Stability Report. It covers what the most powerful central bank in the world perceives as risks to the financial system stability. Is it time for the gold bulls to uncork champagne?

Financial Sectors Appears Resilient, But…

The Fed’s assessment of the financial vulnerabilities in the latest Financial Stability Report has little changed since November 2018 when the report was inaugurated. The financial sector appears resilient, with low leverage and limited funding risk. It seems that gold will have to wait longer for a crisis that could push its prices out of the comfort zone.

Thursday, May 09, 2019

Sector expert Michael Ballanger suggests investors "never underestimate the replacement power of stocks within a Fed-induced credit bubble" and provides other observations on the markets. Looking back at the events of last week, the S&P 500 finally took out the October highs at 2,941 intraday, making the 2018 bear market one of the shortest on record at 93 days (Sept. 21–Dec. 24). You will recall that I wrote in early January that the action of the Santa Claus rally (positive) and the action of the First Five Days rule (positive) was finally confirmed by the January Indicator (positive), setting up new highs for 2019 (which was right). I also said that I expected a retest of the December lows (wrong) and a pullback from the 200 daily moving average (dma) in February (wrong) and that Goldman Sachs was headed back to $150 (wrong) (at least so far).

Look at these charts. Can any of you honestly see any difference? They both reek of intervention but the only difference is that the one from 2009 has now had books and movies written about it. We know that no one went to jail over the causes of the crash, and we know that the method used by the central bankers to correct the problem (which was to take in all of the toxic paper that was rotting their balance sheets) resulted in more debt creation ($14 trillion worth). This was exactly the root of the 2018 problem because as soon as they tried to remove the 2009 "bandaid,"they were catapulted right back to 2009. Stocks were simply gravitating back to their old trajectory before the Fed/Treasury bailout temporarily saved the stock market. What we got last Christmas Eve was the same bailout as in 2009, but it came about before people started to lose jobs and homes. The "V-bottom"turns in 2009 and in 2019 are identical, and emanated from interventions of the highest order and priority.

Thursday, May 09, 2019

U.S. Representative Alex Mooney (R-WV) introduced legislation this week to provide for the first audit of United States gold reserves since the Eisenhower Administration.

The Gold Reserve Transparency Act (H.R. 2559) – backed by the Sound Money Defense League and government accountability advocates – directs the Comptroller of the United States to conduct a “full assay, inventory, and audit of all gold reserves, including any gold in ‘deep storage,’ of the United States at the place or places where such reserves are kept.”

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